Somerset & Kennebec Railroad v. Cushing

The opinion of the Court was drawn up by Tenney, C. J. The action against Cushing is brought to recover nine assessments of $10 each, upon one share of the capital stock in said company, he having paid the first assessment and no other. The defendant in the other action has omitted to pay either of the ten assessments made upon each of his two shares of the capital stock, and the aggregate amount of those assessments are sought to be recovered. The plaintiffs rely upon a paper, dated February, 1853, signed by the dfefendants, and others, in which the subscribers agree to take the number of shares set against their names, in the capital stock of the Somerset and Kennebec Railroad Company; and pay to the treasurer of said company all assessments that shall be made on said shares, in pursuance of the by-laws and charter of said company, not exceeding one hundred dollars on each share, provided that no assessment shall be made on said shares by the directors, or by the stockholders of said company, until a contract, good and sufficient in law, shall be made between the Kennebec and Portland Railroad Company and the Somerset and Kennebec Railroad Company, as specified in the written contract between the parties. The Somerset and Kennebec Railroad Company, on March 30, 1852, by a corporate vote, adopted their by-laws. One of those by-laws is as follows: “ the capital stock of the company shall consist of seven thousand shares of one hundred dollars each.” It does not appear that this by-law has since been modified in any particular. At meetings of the directors of the plaintiffs, holden on June 10, 1853, Sept. 6, 1853, Nov. 29, 1853, and March 7, 1854, assessments were made upon each share of the capital [531] stock subscribed for; there were ten in number, and each for the sum of $10. It is admitted that the several assessments were made in the mode required by the charter and by-laws, and that the notices and circulars provided for thereby, in relation to said assessments, were duly given and forwarded; also, that after the neglect of the defendants to pay their several assessments, as before stated, their several shares were sold upon proceedings prescribed by the by-laws. It is also admitted that, long before the assessments were made, the company had contracted for the construction of their road from Augusta to Skowhegan, and had commenced the work of construction, and that the same was completed to Skowhegan, at the time of the trial of these actions. It is not contended that the agreement between the Kennebec and Portland Railroad Company and the plaintiffs has not been substantially and effectually made. But it is insisted that the assessments upon the defendants’ shares are not in pursuance of the by-laws and charter of the company. The records show that only 4091 shares of the capital stock have been subscribed for or taken. By the charter, special laws of 1848, c. 186, § 2, the capital of said corporation shall consist of not less than 1500, nor more than 8000 shares. It is manifest that it was designed by the Legislature that the number of shares of the capital stock should be definitely fixed by the corporation or by its directors. And it is not contended by either party that the determination of the amount of capital stock, by the vote of the stockholders, was not necessary in order to prosecute the enterprise, nor that it was not legal. It certainly was indispensable as a basis of the right, under the charter, to raise money by assessment for the construction of the road, &c. Worcester and Nashua Railroad Co. v. Hinds, 8 Cash. 110. Were the assessments upon the defendants’ shares made according to the provisions of the contract which they made with the company ? The president and directors for the time being are authorized, by the charter, “ to make such equal as [532] sessments from time to time, on all the shares of the corporation, as they may deem expedient and necessary in the execution and progress of the -work,” <fcc. The by-laws, under the head of assessments, confer upon the president and directors the same power in substantially the same terms. The assessments made upon the defendants’ shares were at times when the capital stock consisted of 7000 shares, and $100 each. This number of shares, and the sum at which they should be estimated, not being fixed by the charter, could be changed from time to time by a vote of the stockholders, or of the directors. But it does not appear to have been changed, and, therefore, the assessments, in order to be legal, must be founded upon this determination, as much as though the capital stock was fixed by the Legislature. And could the assessments of the shares of the defendants, amounting to the full sum for which they could be made if all the capital stock had been taken, be regarded as “ equal assessments on all the shares of the corporation ?” It is insisted, however, by the plaintiffs, that, by the terms of the contract, they are entitled to recover; and the case of Kennebec and Portland Railroad Co. v. Jarvis, 34 Maine, 360, is invoked in support of this ground. The contract relied upon in the case cited is distinguishable from the one under consideration. In that case, the defendant, with others, signed the contract, which was in the following words and figures: — “We, the subscribers, hereto agree and promise to take the number of shares set to our names respectively, in the Kennebec and Portland Railroad Company, which shares are to be each of the value of $100, and to be paid for at the rate, at such times, to such persons, and in such installments, as shall be hereafter required, by a vote of the company. Gardiner, Jan. 5,1847.” By the charter of that company, § 4, it is enacted that the capital stock may consist of $1,200,000, and shall be divided in shares of $200 each. By an amendatory Act of July, 1846. the capital stock was to be divided into shares of $100. By the 13th by-law, the capital stock was to consist of 12,000 [533] shares of §100 each, and the number of them might be increased from time to time, as the directors should determine, and the Legislature authorize. Provided, &c. The shares in that corporation were less in number than 12,000, and one ground of defence, was that the assessments, being made upon a number less than that required, were unauthorized and void; inasmuch as the promise was upon a condition precedent, that the whole capital should be raised by a subscription for all the shares. It was said by Siiepley, C. J., in delivering the opinion of the Court, that “ the contract could not have had reference to any certain number of shares, or certain amount of capital as fixed by the charter, and there is no language used in the contract prescribing the number of shares, or the amount of the capital. The promise is not to pay ‘ all legal assessments.’ It is to pay for the shares as he should be required, by a vote of the company, without any reference to assessments, or payments to be made on other shares.” “ The agreement provided for the payment of the amount of the shares, without any reference to a fixed capital, or to any number of shares, or to any assessment to be made on other shares.” It is very obvious that the construction, put upon the contract in that case, is different from that required on the one executed by the defendants. It is insisted that, in the case against Cushing, the voluntary payment by him of the first assessment on his share estops him from setting up the defence relied upon. The case does not find under what circumstances he paid the assessment. It may have been under a want of knowledge that the 7000 shares were not subscribed for, or it may have been with a view to raise money to defray expenses necessarily incurred in arrangements preparatory to the execution of the objects of the incorporation. Salem Mill-dam Co. v. Ropes, 6 Pick. 23; Oldtown and Lincoln Railroad, Co. v. Veazie, 39 Maine, 571. Other grounds of defence have been relied upon, but their [534] consideration is not material to the final disposition of this case. According to the agreement of parties, the cases are each to be disposed of by the entry of Judgment for defendants. Hathaway, Appleton, May, and Davis, J. J., concurred.